German offshore wind sector needs more than just new law: executives
BERLIN (Reuters) - Changing regulations will not be enough to make Germany's planned offshore wind expansion work, executives and industry experts say, arguing the industry needs to find other ways to support one of the main pillars of the country's energy shift.
Germany's cabinet will discuss on Wednesday a draft law on expanding the use of offshore wind parks, a reaction to the slow expansion that network operators said was caused by insufficient regulation.
"Certainly, the new law is a step in the right direction," Mike Winkel, head of renewable energy at E.ON, Germany's largest utility, told the annual Handelsblatt conference on renewable energy.
"But the main goal has to be to get the grid connections done in time. Greater certainty for investors can only support this," he added.
He pointed to lengthy procedures to approve and connect offshore projects that were slowing down the offshore expansion.
Grid operators are reluctant to build power lines at sea because they have to pay compensation should they break down. So many wind farms could lack the means to transfer the power they are generating back to the mainland.
The government is trying to address this bottleneck by passing on those costs to power consumers to reduce the risk for investors who have been very hesitant to invest in the offshore sector so far.
That way, the government wants to make sure it can meet its goal of installing more than 10,000 megawatts (MW) of offshore capacity by 2020, and 25,000 MW by 2030, to replace 20,500 MW in nuclear capacity gone by the end of 2022.
This goal looks increasingly difficult, as so far only 220 MW in offshore capacity has been installed.
The new law would also give more leeway to grid operators such as TenneT and 50Hertz, which is jointly owned by Belgian grid operator Elia and Australian Industry Funds Management (IFM) to determine the date of connection.
Hans-Peter Villis, chief executive of Germany's No.3 utility EnBW, warned that the new law, if implemented, may in fact delay some offshore projects that were still at the planning stage, he said in a letter obtained by Reuters.
Following Germany's decision last year to fully abandon nuclear power by 2022, Germany is partly banking on renewable energy, including solar and wind power, to make up for the idled capacity.
Germany's nuclear reactors accounted for 23 percent of the country's power supply in 2010 and 18 percent in 2011. By 2020, Germany wants at least 35 percent of its power to come from green energy, up from 25 percent now.
At the forefront of Germany's efforts to plug the gap is offshore wind power, which near-neighbor Denmark currently uses to supply a quarter of its electricity.
But wind power is also the project's Achilles' heel.
Offshore wind farms are expensive to build and maintain because of their huge size and the logistics of constructing and repairing platforms. This makes profitability hard to predict for potential investors.
Norbert Giese, vice president of offshore development at Germany's REpower, said the industry could take small but effective steps to help make the expansion work.
"The turbines are ready to go, but the network connection isn't just lying around somewhere," he said, adding the company was filling some positions with English-speaking applicants, benefiting from expertise brought over from Britain, the world's largest single offshore market.
The UK has so far installed about 2.5 GW in offshore capacity, most of the global total of 4 GW.
William D'haeseleer, director of the energy institute at the University of Leuven, said that Germany, too, could be successful in its expansion efforts.
"But you will have to show your very best side. Good luck."
(Additional reporting by Markus Wacket; editing by James Jukwey)
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